Internal Post memo suggests Rocky to close

DENVER - The publisher of the Denver Post claims the owner of the Rocky Mountain News said the paper would be closed "as soon as practical," belying hopes that a buyer for the Rocky will be found.

The Rocky, Colorado's oldest newspaper, was put up for sale on Thursday after owner E.W. Scripps Co. said it lost about $11 million on the operation in the first nine months of the year.

Cincinnati-based Scripps said in a news release that if no acceptable offers emerge by mid-January, it will "examine its other options." It gave no details.

An internal Denver Post memo, authored by publisher Dean Singleton, read in part, "an announced sale is usually the first step leading to a failing newspaper's closure."

"Scripps notified MediaNews Group [the owner of the Post] on November 19 that it planned to close the Rocky Mountain News as soon as practical," the memo said.

Singleton's memo said MediaNews Group had been seeking assurances from Scripps that it would honor its obligations to the newspapers' joint operating agreement, which was instituted in 2001 to split publishing costs and revenues.

"MediaNews was surprised that Scripps made the Thursday announcement without resolving the open financial issues," Singleton wrote. "But I'm sure these issues will be worked out either amicably or otherwise."

Click here to read the full memo.

Scripps President and CEO Rich Boehne told 9NEWS if it cannot find a buyer, it may have to shut the paper down. Boehne says Scripps cannot afford to carry the paper.

Boehne says that is not the first option for the paper and hopes it will not come to that.

Dow Jones business columnist Al Lewis, who previously worked for both the Post and the Rocky, said it is "highly unlikely" that a buyer for the Rocky will be found.

"Could you sell your house between now and January 15th? I mean, that's basically what they're saying. They're saying we're looking for buyers, we're going to give it until mid-January and you know, if we don't find one by mid-January, to heck with it, we're going to consider our other options including shutting the paper down," said Lewis.

Lewis says the statement by Scripps that the Rocky is losing millions a year suggests they are not serious about making the paper attractive to a new buyer.

"While I doubt a buyer will emerge, The Denver Post has a right of first refusal on the sale of The Rocky and its DNA [Denver Newspaper Agency] ownership," Singleton said in his memo.

"I think it's easy to view this as an obituary and I think that's a bad mistake for people to assume," said Mark Contreras, senior vice president of newspapers for Scripps. "We're at a point where we need to find another person who can take the Rocky to a second, healthier life because right now it's difficult for us to maintain the financial pressures it's going to put on us."

Boehne says the company's 50 percent share of the joint operating agreement cash flow "is no longer enough to support the Rocky, leaving us with no choice but to seek an exit."

Singleton's memo called the Rocky's financial contributions "a serious drain on the performance of The Denver Post for years."

Scripps said the joint operating agreement began, known as the Denver Newspaper Agency, has about $130 million in long-term debt from a recently completed consolidation of production facilities with new printing presses and other upgraded equipment.

"Some will be tempted to immediately write the obituary of the Rocky, but we're hoping this step will open the way for a creative solution to the financial challenges faced by Denver's great newspapers," Boehne said.

The Rocky was founded in 1859, and Scripps purchased the paper in 1926. The announcement that the property is for sale came amid a series marking the paper's upcoming 150th anniversary. The News has 232 editorial employees, according to Lee Rose, corporate communications manager with Scripps.

Circulation is currently 210,000 daily and 457,000 on Saturday.

Boehne says the problem is not getting people to read the paper, it's that the advertising dollars that aren't there anymore.

"In the last couple of years it's gotten tougher. Classified ads have moved from our pages onto our Web site. We still have the classifieds, but it's not as profitable on the Internet as it is in print," he said.

Boehne says telling employees at the Rocky the paper doesn't generate enough costs to support itself was one of the hardest things he had to do.

"As I told the staff today, what we're doing is throwing a lot of uncertainty in your lives for the next couple of months and we're just incredibly sorry. I wish this didn't happen. I wish I didn't have to be here today, but it really was unavoidable," he said.

Staff members at the Rocky say they were all a little shocked on Thursday. They say the present economy doesn't bode well for finding a buyer, but they say they have their fingers crossed.

"We didn't get into detail about what would happen if we have to shut it down, but the company has historically been very good at treating people well and it's a big area of importance to the company that that happens if we got to that point, but we're no where near that," said Contreras.

The Rocky publishes Monday through Saturday and The Post publishes Sunday through Friday.

The Rocky joins a crowded marketplace. Cox Enterprises Inc. is trying to sell its newspapers in Texas, North Carolina and Colorado. Landmark Communications Inc. said in January it wanted to sell nine daily newspapers but has found that buyers are having trouble getting loans amid the credit crisis.

"It's a very bad time to sell newspapers, especially those in large cities," industry analyst John Morton said. Advertising revenues have been falling with competition from online classified ad sites like Craigslist and weakness in real estate, the job market and the auto industry.

"There are a lot of newspapers for sale and nobody leaping forward to buy them as of yet," Morton said. "It speaks both to the uncertainty of the future and, of those that have received offers, they were so low the sellers didn't want to accept them."

Scripps operates newspapers in 15 markets and has 10 TV stations. It also operates United Media, which distributes the Peanuts and Dilbert comic strips and 150 other features.

Scripps shares were down 3 cents to $2.30 in afternoon trading.

"This is a complicated market," said Boehne. "We'll see what kind of offers come up."